Main climate regulations, policies and authorities

International agreements

Do any international agreements or regulations on climate matters apply in your country?

Malta is a party (both directly and indirectly as a member of the European Union) to the United Nations Framework Convention on Climate Change (UNFCCC), which it ratified in March 1994. It became an Annex I party to the UNFCCC in 2010. Malta ratified the Kyoto Protocol in November 2001 and the Paris Agreement in October 2016.

As a member of the European Union, Malta has implemented all EU climate-related legislation, including that on the promotion of renewable energy, emissions trading, reporting and monitoring of greenhouse gases, ozone layer protection and transport fuels.

International regulations and national regulatory policies

How are the regulatory policies of your country affected by international regulations on climate matters?

As an EU member state, Malta’s climate action is primarily driven by EU climate policy, being also obliged to abide by relevant EU legislative instruments. Its membership in the EU and its Annex I status mean that Malta has had to step up climate action, both in terms of monitoring and reporting, and in terms of quantified emission limitation and reduction commitments towards EU and global mitigation efforts.

Main national regulatory policies

Outline recent government policy on climate matters.

Malta’s focus in recent years has been to replace its inefficient conventional electricity production infrastructure and to introduce LNG as fuel for power generation, which until now was heavy fuel oil. To this end, Malta closed its inefficient Marsa Power Station, completed and placed in operation the 200MW interconnector with the European grid, and commissioned a new 205MW gas-fired, high-efficiency combined cycle gas turbine (CCGT) power plant as well as an LNG facility for the provision of natural gas. In addition, the 149MW power plant, which comprises eight diesel engines, has been converted to run on natural gas instead of heavy fuel oil. These developments will result in significant primary energy savings and in substantial reductions in GHG emissions from the energy sector.

Malta’s policy on renewable energy and energy efficiency is discussed in questions 17 and 19.

Main national legislation

Identify the main national laws and regulations on climate matters.

The Promotion of Energy from Renewable Sources Regulations (Subsidiary Legislation 545.11) is the main piece of legislation governing greenhouse gas emissions. These Regulations govern both the reduction in emissions and the promotion of energy from renewable sources, and set out the renewable energy targets that Malta is obligated to achieve by 2020. With respect to reduction of greenhouse gas emissions in particular, Malta must reduce these emissions by 10 per cent against 1995 levels. The Regulations also contain provisions for the implementation of national support schemes and cooperation mechanisms among EU member states. Other main climate-related laws and regulations include:

  • the Climate Action Act (Chapter 543 of the Laws of Malta), which sets out the guiding principles for the mitigation of greenhouse gas emissions;
  • the Energy Efficiency and Cogeneration Regulations (Subsidiary Legislation 545.16), which promote the use of energy efficiency measures to ensure achievement of the EU’s 2020 target on energy efficiency;
  • the Industrial Emissions (Integrated Pollution Prevention and Control) Regulations (Subsidiary Legislation 549.77), which provide a framework for the prevention and control of pollution arising from industrial activities;
  • the European Union Greenhouse Gas Emissions Trading Scheme for Stationary Installations Regulations (Subsidiary Legislation 423.50);
  • the European Union Greenhouse Gas Emissions Trading Scheme for Aviation Regulations (Subsidiary Legislation 423.51); and
  • Regulation (EU) 2018/1999 of the European Parliament and of the Council on the Governance of the Energy Union and Climate Action, which sets out the legislative foundation for a governance system of the Energy Union and Climate Action, which aims to ensure the achievement of the EU’s 2030 and long-term objectives as well as its international commitments under the Paris Agreement.
National regulatory authorities

Identify the national regulatory authorities responsible for climate regulation and its implementation and administration. Outline their areas of competence.

The Malta Resources Authority (MRA) is the body responsible for certain climate-related matters, namely climate change reporting and the operation of the emission trading system (ETS), both for stationary installations and aviation.

The Energy and Water Agency, a body set up within the Ministry for Energy and Water Management, is tasked with formulating and implementing national policies in the energy and water sectors. With regard to climate action, the agency is responsible for the implementation of legislation and policies related to renewable energy and energy efficiency. The formulation and implementation of national support schemes promoting the use of renewable energy also fall within the Agency’s competence.

General national climate matters

National emissions and limits

What are the main sources of emissions of greenhouse gases (GHG) (or other regulated emissions) in your country and the quantities of emissions from those sources? Describe any limitation or reduction obligations. Do they apply to private parties in your country?

As reported in Malta’s 2030 National Energy and Climate Plan (drafted in 2018), the main contributors of GHG emissions are:

  • Energy and transport: the energy industry and the transport sectors are the two main contributors of CO2 emissions, together making up over 80 per cent of total CO2 emissions. These sectors also contribute to nitrous oxide emissions with a combined share of approximately 11 per cent of total emissions.
  • Waste and agriculture: these two sectors are the main contributors of methane emissions, with the waste sector accounting for approximately 80 per cent of the total share of methane emissions, and agriculture accounting for approximately 18 per cent. The agriculture sector is the largest contributor of nitrous oxide emissions, with a share of over 70 per cent, while the waste sector accounts for just over 12 per cent.

See questions 9 to 14 for obligations on reduction and limitation of emissions.

National GHG emission projects

Describe any major GHG emission reduction projects implemented or to be implemented in your country. Describe any similar projects in other countries involving the participation of government authorities or private parties from your country.

Major GHG reduction projects in the energy sector are outlined in question 3.

In addition, Malta has implemented various energy-reducing schemes, including financial support for photovoltaic (PV) systems of at least 1MWp and the replacement of inefficient appliances for vulnerable persons. The Maltese government has also issued schemes aimed at encouraging ownership of electric vehicles, reducing the number of old motor vehicles on the road and thus reducing emissions.

Domestic climate sector

Domestic climate sector

Describe the main commercial aspects of the climate sector in your country, including any related government policies.

PV technology is commercially established in Malta. Units are relatively light and simple structures for government support are sufficient and easily obtainable. They are not unduly disadvantaged by economies of scale from a technical perspective. PV systems produce energy that is green and secure, and fits very well with two of the main objectives of the energy policy. Although still more expensive than conventional fossil-fuel-generated electricity, the gap is closing, especially when externalities are considered.

There has been a significant reduction in the price of PV panels over the years, driven by greater demand and mass production. This is likely to continue, although at a slower pace. This downward price trend has established PVs as a credible source of renewable energy and has resulted in an increase in the number of applicants benefiting from government support schemes.

General GHG emissions regulation

Regulation of emissions

Do any obligations for GHG emission limitation, reduction or removal apply to your country and private parties in your country? If so, describe the main obligations.

Obligations to reduce GHG emissions mainly arise out of the emissions trading system (ETS) regulations and the Industrial Emissions (Integrated Pollution Prevention and Control) Regulations. The ETS works by putting a limit on overall emissions from certain installations and aircraft, which limit is reduced each year. Within this limit, companies can buy and sell emission allowances as needed. This ‘cap-and-trade’ approach gives companies flexibility to cut their emissions in the most cost-effective way. The ETS covers certain stationary installations and aircraft operating with a valid licence granted by the civil aviation authorities of Malta, or aircraft that, although not licensed by the civil aviation authorities of Malta, have Malta identified as the being the state with the greatest attributed emissions from flights performed by that aircraft in the base year.

The Industrial Emissions Regulations is the main instrument regulating pollutant emissions from ‘high-risk’ industrial installations, such as energy plants and certain waste management activities. In terms of these regulations, installation operators are required to operate within the emission limit values set out in the permit for the particular activities carried out by the installation. They are also required to operate the installation in accordance with the best available techniques. Installation operators must monitor, record and report annual emissions to the competent authority in accordance with the conditions laid down in the permit.

GHG emission permits or approvals

Are there any requirements for obtaining GHG emission permits or approvals? If so, describe the main requirements.

Operators of certain installations must obtain a permit, prior to commencement of operations, under both the emissions trading regulations and the industrial emissions (IPPC) regulations. The operator must submit an application containing information about the operator and the installation activities, the raw materials to be used that are likely to lead to emissions of GHG gases, the sources of the emissions and any other information that the competent authority may require. To be granted a permit under the former regulations, the competent authority must be satisfied that the operator is capable of complying with the requirements of the regulations and the conditions of the permit.

The requirements for obtaining a permit under the industrial emissions (IPPC) regulations are similar to that under the ETS. The operator must provide the competent authority with information on the operator, the installation and its activities, raw and auxiliary materials to be used, sources of emissions, and the proposed technology and techniques for preventing, or where not possible reducing, emissions. The operator may also be required to place a financial guarantee in favour of the competent authority to secure its obligations under the permit. The competent authority shall take into account the applicant’s suitability to undertake the proposed activity, having regard to the operator’s qualifications, experience and technical competence, and its financial capacity to comply with its obligations under the permit.

Oversight of GHG emissions

How are GHG emissions monitored, reported and verified?

Under the ETS, installation and aircraft operators must submit a monitoring plan describing the measures by which annual emissions from the installation will be monitored and reported. The monitoring plan must be approved by the competent authority and will serve as the accepted methodology for monitoring in that installation. On an annual basis, the operator of the installation must submit verified emissions reports to the competent authority. The reports must first be verified by a competent, independent accredited verifier before being submitted to the competent authority. A verification report issued by the verifier must accompany the emissions report when this is submitted to the authority.

In terms of the regulations governing industrial emissions, operators must include in the permit application measures for monitoring emissions. The competent authority shall ensure that the permit conditions contain detailed monitoring requirements including the methodology, frequency and evaluation procedure for monitoring emissions. At least once annually, the operator must provide the competent authority with information and results obtained from emission monitoring.

GHG emission allowances (or similar emission instruments)

Regime

Is there a GHG emission allowance regime (or similar regime) in your country? How does it operate?

As a member of the EU, Malta has implemented the ETS, which regulates emissions of GHG for certain stationary installations and aircraft. The ETS works by putting a limit on overall emissions from certain installations, which is reduced each year. Within this limit, companies can buy and sell emission allowances as needed.

Registration

Are there any GHG emission allowance registries in your country? How are they administered?

Directive 2003/87/EC, which establishes the scheme for greenhouse gas emission allowance trading within the EU, requires that all allowances be held in the Union registry. The registry system provides for the electronic recording of issuance of allowances and of all transactions involving allowances or units derived from Kyoto Protocol project-based mechanisms performed by operators participating in the EU ETS. The registry system records the following elements:

  • allowances and units that are issued to and held in installation or aircraft operator accounts;
  • annual verified reported emissions for installations or aircraft operators;
  • transfers of allowances and units into or out of accounts and surrendering, cancellation and replacement of allowances; and
  • annual compliance statements of emissions.

In Malta, the role of national registry administrator is held by the MRA. Accounts of aircraft and operators of installations in Malta are opened and administered by the national registry administrator.

Obtaining, possessing and using GHG emission allowances

What are the requirements for obtaining GHG emission allowances? How are allowances held, cancelled, surrendered and transferred? Can rights in favour of third parties (eg, a pledge) be created on allowances?

Operators of installations and aircraft subject to the compliance requirements of Directive 2003/87/EC must have a holding account opened in the Union registry. The free allowances to which an operator is eligible for a particular year are issued into the operator’s account by the registry administrator.

Operators must account for reported emissions by surrendering an amount of allowances equivalent to the quantity of actual emissions reported in the previous year’s annual emission report. This function is carried out through the registry account.

An operator holding in their account a quantity of allowances that is less than the actual emissions to be covered by surrendered allowances, must acquire additional allowances or use units derived from Kyoto Protocol project-based mechanisms. An operator with a quantity of allowances greater than the amount of emissions to be covered by surrendered allowances can either hold on to excess allowances or sell them. An operator may also borrow allowances from the subsequent year to cover any shortfall in allowances during a particular year; however no borrowing of allowances can take place between trading periods.

The administrator shall cancel allowances at any time at the request of an operator of an installation holding those allowances.

Trading of GHG emission allowances (or similar emission instruments)

Emission allowances trading

What GHG emission trading systems or schemes are applied in your country?

In Malta, the EU ETS is applied and covers both stationary installations and aircraft. The main features of the system are described in questions 9 to 14.

Trading agreements

Are any standard agreements on GHG emissions trading used in your country? If so, describe their main features and provisions.

No standard agreements on GHG emissions trading are used in Malta.

Sectoral regulation

Energy sector

Give details of (non-renewable) energy production and consumption in your country. Describe any regulations on GHG emissions. Describe any obligations on the state and private persons for minimising energy consumption and improving energy efficiency. Describe the main features of any scheme for registration of energy savings and for trade of related accounting units or credits.

Malta’s average final energy consumption for the period 2016-2018 is approximately 620ktoe. As from 2017, Malta has used, almost exclusively, natural gas for electricity generation, with a small share (431GWh) coming from renewables. According to the national energy efficiency action, Malta’s indicative target for 2020 is 822,903toe in primary energy consumption. According to the revised Energy Efficiency Directive, whereby Malta is required to achieve new savings each year from 1 January 2021 to 31 December 2030 equivalent to 0.24 per cent of annual final energy consumption averaged over the most recent three-year period prior to 1 January 2019.

The action plan highlights the following measures and actions to increase energy efficiency and reduce energy demand:

  • electricity tariffs designed to promote energy efficiency among consumers;
  • large enterprises are to perform high-quality energy audits every four years;
  • non-SMEs shall be encouraged to sign voluntary agreements with the Energy and Water Agency to pursue energy efficiency measures;
  • smart metering of electricity is to continue, also with the aim to empower consumers to manage their energy consumption intelligently;
  • the inclusion of renewable energy in households in the drafting of the ‘Minimum Energy Requirements for Building Guidance’ and the ‘Nearly Zero Energy Building Plan’; and
  • the continuation of residential schemes until 2020 (ie, grants for the installation of PV systems, solar water heaters, roof insulation, double glazing, and water-to-water heat pumps).

In the private sector a number of actions and schemes were designed to facilitate interventions in energy efficiency initiatives and promote the introduction of energy management systems. Non-SMEs registered and doing business in Malta are required under Maltese law to carry out energy audits. The first audits were submitted in December 2015 and must be repeated every four years. Such audits can only be carried out by internal or external energy auditors who are listed on the website of the Regulator for Energy and Water Services (REWS) or by energy auditors eligible in other member states. SMEs are also encouraged to carry out energy audits and report their verified energy savings. The Energy and Water Agency has set up a voluntary scheme for the period 2014-2020 whereby such SMEs can benefit from grants to help them carry out energy audits.

Regulations on GHG emissions are identified in questions 9-14.

Other sectors

Describe, in general terms, any regulation on GHG emissions in connection with other sectors.

There is no specific sectoral regulation on GHG emissions. However, the Industrial Emissions (IPPC) Regulations cover various activities, including certain waste management activity, exploration and exploitation of natural resources, and certain industrial processes. Emissions from aircraft are covered under the ETS.

Renewable energy and carbon capture

Renewable energy consumption, policy and general regulation

Give details of the production and consumption of renewable energy in your country. What is the policy on renewable energy? Describe any obligations on the state and private parties for renewable energy production or use. Describe the main provisions of any scheme for registration of renewable energy production and use and for trade of related accounting units or credits.

Total final energy consumption of renewable energy systems (RES) in Malta in 2017 amounted to 431GWh, which equates to 7 per cent of gross final energy consumption. The government’s policy is to fully exploit all reasonable potential indigenous sources of RES to achieve Malta’s 2020 RES target of a 10 per cent share in gross final consumption of energy. PV technology was demonstrated to be the most robust and fastest-growing of all technologies, owing much to the characteristics of Malta in relation to solar intensity but also to the successful history of public and government initiatives to promote the technology to its maximum reasonable potential. There was a sharp increase in the uptake of PV between 2010 and 2017, with the total cumulative installed capacity at the end of 2017 standing at just over 112MWp. Successful PV deployment has happened largely due to national incentives offered through various schemes, including European Regional Development Fund co-financed grants and attractive feed-in-tariffs.

Currently, the largest contribution of renewable energy is provided by solar PVs, contributing around 36 per cent of renewable energy in 2017, followed by heat pumps with 22 per cent, the use of biofuels in the transport sector at 21 per cent and solar water heaters contributing 13.6 per cent.

Malta, as a member of the EU, must achieve certain targets by 2020, namely 10 per cent final energy consumption from renewable sources by 2020 and a 10 per cent cut in GHG emissions from 1990 levels. Specific to the transportation sector, there is a sub-target of a 10 per cent reduction in GHG emissions by 2020 from 1990 levels. This target is expected to be met largely through the promotion of biodiesel and bio-ethanol. Malta has a biofuels target that requires a minimum biofuel content as a percentage of the total energy content of fuel placed on the market.

Wind energy

Describe, in general terms, any regulation of wind energy.

Malta has no specific regulation on wind energy. Although it has studied the possibility of wind energy, there are no wind farms as yet in Malta.

Solar energy

Describe, in general terms, any regulation of solar energy.

The introduction of the feed-in tariff for solar photovoltaic systems in 2010 led to a sharp increase in uptake of PV in the past decade. The Electricity Generated from Solar Photovoltaic Installations Regulations (Subsidiary Legislation 545.27), enacted in September 2010, sets feed-in tariffs for the electricity generated by PV installations connected to the grid, including those systems benefiting from a capital grant. New feed-in tariffs were published during 2013 and are revised regularly to ensure a reasonable return on investment and avoid overcompensation as market prices of new systems change.

The installation of a PV system may require both a development planning permit from the Planning Authority and a generating licence from the Regulator for Energy and Water Services. In November 2015, the Planning Authority issued a new set of guidelines where one of its objectives was to further support the uptake of solar technologies within the curtilage of buildings. These new guidelines encourage the introduction of PV at ground level within backyards, within the building fabric, in surface car parks and other open spaces, particularly those within non-residential development. Subject to compliance with the guidelines, no specific planning permits are required. However, PV installations that fall outside the scope of these guidelines require a planning permit.

A system of fast-track permitting was also adopted by the REWS for PVs not larger than 16 amps per phase to facilitate the installation of these systems and their connection to the grid. Larger PV systems (greater than 16 amps per phase) still require authorisation by the REWS prior to construction and, once commissioned, a licence to operate is required prior to connection to the grid. These systems may also require a grid connection study to be carried out by Enemalta plc (Malta’s distribution system operator) to ensure seamless integration with the network.

While PV contributes the largest share of renewables in Malta’s final energy consumption, solar water heaters (SWH) also make a notable contribution with a share of 13.6 per cent. SWHs are favoured by the high solar intensity prevalent in Malta and they eliminate a good percentage of energy consumption otherwise going towards water heating in the residential and, to a lesser extent, the commercial sector. Since 2005, a number of grant schemes have been provided to promote the use of solar water heaters for households, increasing RES-H generation by an average of 3.8GWh per year. Nevertheless, there has been a downward trend in recent years in the uptake of SWH installations. This could be attributed to the consumer shift towards PV systems, as well as to developments in the construction and renovation of buildings, linked with limited roof accessibility.

Hydropower, geothermal, wave and tidal energy

Describe, in general terms, any regulation of hydropower, geothermal, wave or tidal energy.

Malta does not specifically regulate hydropower, geothermal, wave and tidal energy.

Waste-to-energy

Describe, in general terms, any regulation of production of energy based on waste.

Regulation on production of energy based on waste does not currently exist. At present there are no waste-to-energy plants in Malta, however the government has recently included in its waste management policy a waste-to-energy plant and recently issued a tender for consultancy services in connection with this project.

Biofuels and biomass

Describe, in general terms, any regulation of biofuel for transport uses and any regulation of biomass for generation of heat and power.

Biomass for generation of heat and power is not regulated under Maltese law. Malta does not have the land area required to cultivate biomass energy crops to any practical extent. Besides this, fertility of the soil is low and water is scarce. Together with Cyprus, Malta has the highest water stress index in Europe, and among the highest in the world. Furthermore, Malta’s heating demand is limited and current policy is to promote high-efficiency electricity-based heating utilising heat pump technology where applicable, which achieves the highest overall fuel efficiency while taking advantage of the decarbonisation of the generation sector. Nevertheless, biomass comprising primarily of wood charcoal, fuel wood and wood pellets is imported into Malta and used for heating purposes by approximately 12,000 households that have a wood or pellet burning stove or fireplace, as well as a small number of establishments in the services sector and industry.

As stated above, crops grown for the purpose of producing biofuel require large expanses of land, fertile soil and an abundant supply of water. Malta has none of these, making it difficult to cultivate biofuel crops domestically. At present, biodiesel is the only biofuel available on the market in Malta. It was introduced in Malta in 2003. Biodiesel consumption saw a steady increase until 2007, which can be mainly attributed to a higher availability from fuel stations and its lower price at the pump. However, consumption declined between 2007 and 2010 despite the increase in the prices of petroleum products. In a report published by the MRA, the factors that could have led to this decline in consumption include the difficulty in accessing pre-blended biofuel and concerns on the quality of biofuel, among others. It must be noted that during this period, fuel stations were only allowed to store and sell B100 biodiesel, with the fuel effectively being blended during refuelling. Eventually two of the three local producers of biodiesel closed down. To reverse this trend, regulation was introduced in 2011 to boost the use of biofuels. This introduced a substitution obligation for importers and wholesalers of automotive fuels whereby market players were now obligated to place on the market a minimum amount of biofuel content calculated as a percentage of the total EN228 petrol and EN590 diesel imported or wholesaled. The percentage was set at 1.5 per cent for 2011, and expected to reach 10 per cent by 2020.

The biofuels currently used in Malta are biodiesel FAME (fatty acid methyl esther) and HVO (hydrotreated vegetable oil). Biodiesel FAME has to meet the quality standard requirements of EN 14214 and HVO has to meet the quality standard requirements of MS EN 15940. In 2017, UCO (used cooking oil) showing low emission factors was already used as feedstock for biodiesel and partly for HVO. The other feedstock for HVO was palm oil (process not specified).

Carbon capture and storage

Describe, in general terms, any policy on and regulation of carbon capture and storage.

Malta has no regulation or policy on carbon capture and storage.

Climate matters in transactions

Climate matters in M&A transactions

What are the main climate matters and regulations to consider in M&A transactions and other transactions?

No specific climate matters are considered in M&A transactions.

Update and trends

Emerging trends

Are there any emerging trends or hot topics that may affect climate regulation in your country in the foreseeable future?

No updates at this time.